The President’s Pen is a weekly blog written by Jonathan Smith, New Vision’s President and CEO about local economic development projects and initiatives. It also covers economic trends, workforce issues, business climate policies, and manufacturing news.
Expansion Management magazine’s Roundtable conference in Tucson recently because it gives our office a good chance to meet site selectors and learn about issues impacting new factory locations. It was good to tout our location with corporate real estate consultants – it was even more interesting to have two of them take diverging views on future job trends during their conference presentations.
Dean Barber, a site location consultant based in Texas, talked to roundtable attendees about automation’s impact on future jobs. Barber cited that automation will wipe out jobs just like threshers eliminated 30 percent of farm labor a century ago. Bruce Rutherford with corporate real estate firm Jones Lang LaSalle took an opposite view on jobs in the future. He cited the tremendous boom coming with America’s energy renaissance and felt it would drive robust job markets and opportunities.
Barber cited a growing disconnect between productivity and employment that is signaling a decline in traditional employment as we know it. Since 2001 factory productivity has climbed 21 percent. During the same period job creation climbed only 1.9 percent. This is the first time in recent history that productivity and job growth trends have decoupled and Barber expects this trend to continue.
Part of job changes are driven by automation. Baxter, a machine at Vanguard Plastics works 120 hours a week for $1.50 per hour. The Doosan 550 at Webb Wheel’s Alabama facility turns out 300,000 brake drums per year. Going forward major electronics manufacturer FoxConn plans to use robotics to greatly reduce the 1.2 million workers making ipads and other consumer gadgets. These are just some of the examples of mechanization’s march forward.
Barber also posited that we are driving these changes. When we book a trip online, use Turbotax, or use self serve check out at the grocery store we are driving changes in employment. Whole employment categories from secretaries to travel agents are starting to disappear.
Bruce Rutherford took an opposite tack on future employment. He expects the United States to be the world’s largest oil and gas producer within the next seven years. In particular natural gas production will spike in the coming years and create wealth and jobs across the United States. The mining, production and distribution of natural gas will boost our economy. The State of Ohio alone gained over 39,000 new jobs as a result of participating in the natural gas boom.
The use of natural gas in factories and fleets across our country will also drive robust business growth. Natural gas is a $1.50 a gallon cheaper than diesel. Rutherford expects plastics, chemical, metals, and paper manufacturers to do better with natural gas since energy costs are a major factor for these sectors. As these sectors realize cost savings they will be in a better position to innovate expand and create new employment opportunities.
I believe that we ultimately have some time to tackle job related issues in the future. Like Rutherford I am sanguine about the economic opportunities coming from natural gas and oil independence. At the same time though I know that industries will continue to automate and I suspect they will do this at an even faster pace if they are doing well.
What both gentlemen overlooked is that there will be an enormous number of job opportunities as a result of baby boomer retirement. With a huge generation of workers retiring over the next 15 years we have great opportunities to put people to work. This retirement trend also buys us time against the march of automation. Yes some jobs now will be lost entirely but new jobs will be created and existing positions will need to be filled. For these reasons I think our American workforce has a bright future. Having said this we cannot afford to be complacent in Yakima County Bloomington Illinois or Knoxville Tennessee. The best opportunities ahead will come to the communities who make smart investments in workforce training and education. People’s skills will drive the success of communities, their employers and largely determine their own success.